More than a dozen years after leading a drastic reduction in Virginia’s “car tax,” former Gov. Jim Gilmore is fighting to protect the cuts and kill the tax altogether while members of both parties seek to raise it again to fund an ever-expanding budget.
Despite Republicans narrowly controlling Virginia’s Senate and holding a commanding edge in the House of Delegates, tax increases are being discussed in the Old Dominion. Former Democratic National Committee Chairman Terry McAuliffe is currently governor. Gilmore expects this push for a tax increase to fail, but he says Republicans need to be much stronger than they have been to this point.
“We certainly believe the House of Delegates will stand fast,” Gilmore said. “We certainly hope that they do. … We’ve always had a problem that moderate to liberal senators in the Virginia state Senate want to continue to increase taxes, and they never really liked the car tax cut, even though many of them were elected on it. That’s a real problem.”
In fact, this debate is flaring up again because of pressure from a Republican member of the Senate.
“This issue has been raised because an outgoing Republican state senator has said we ought to reach back in and get this money,” Gilmore said.
Listen to the WND/Radio America interview with former Gov. Jim Gilmore:
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Gilmore was elected governor in 1997 and made elimination of the personal property tax, or car tax, his No. 1 priority. Most states don’t have such a tax, which annually charges vehicle owners a percentage of the blue book value. Gilmore said it was a major burden on Virginia families.
“The car tax is charged by localities to individual people living in the cities and counties,” he said. “The individual citizens get a bill every year in the mail in which they’re asked to pay a very substantial amount of money for the privilege of owning their automobile. This was a hated tax.”
Gilmore added, “Some people couldn’t afford it. People who were in desperate straits were using their car to get to and from work. All of a sudden, they were having to pay hundreds, if not thousands, of dollars for the privilege of owning their car. Young people were not able to pay it suddenly because of lower wages and were having to put it on credit cards.”
Upon taking office in 1998, Gilmore successfully pushed a plan through the Legislature to phase out the car tax over the next few years. Seventy percent of the burden had been wiped out when circumstances forced Gilmore and lawmakers to hold rates in place.
“We stopped it because of the (2001) recession, but we also built in a plan to make sure that the phase-out would continue and that the car tax would be completely eliminated,” he said. “Sadly enough, Gov. (Mark) Warner, who came after me, never fulfilled his promise, never proceeded to finish the phase-out, and there was no leadership in the Legislature to do it, either. So unfortunately, a remnant of that car tax exists today.”
Far from making good on his vow to phase out the car tax, Warner froze the car tax in place while raising taxes elsewhere.
“After I left office, Gov. Warner raised taxes on the people of Virginia, whining that the car tax cut was depriving the commonwealth of revenue,” Gilmore said. “So they’ve been paid once for this car tax cut, sadly enough, and now they want to get paid again.”
Some localities in Virginia did see a car tax rate increase as part of the 2012 transportation package, which critics describe as the largest tax increase in commonwealth history. That legislation was championed by a Republican governor (Bob McDonnell), a Democrat Senate and a heavily Republican House of Delegates.
Gilmore said the constant thirst for more tax dollars in Richmond comes despite an explosion in tax revenues over the past decade. He said as state coffers swell with tax payments, the government just wants to spend more and more. The proof, he said, is an annual budget today that is over 260 percent higher than it was when he left office in 2002.
“The budget of Virginia has gone up dramatically in the last number of years,” Gilmore said. “A little bit of money going into (car tax relief) regularly could have eliminated it totally and not one penny of additional money has gone into tax relief, even though the budget has grown from $18 billion to $47 billion.”
One of the key sticking points in eliminating the car tax is the money committed to cities and counties based on the original car tax rate. Virginia is still on the hook for reimbursing those localities for the difference in revenues lost as a result of the car tax cuts. Commonwealth officials now keep funds in reserve to reimburse the cities and counties, but that pile of money can often be irresistible to politicians.
“That body of money is a very attractive target for members of the Legislature who want to reach in there and get new money,” he said.
Gilmore said killing the rest of the car tax should be an easy decision for Virginia lawmakers and would set the stage for meaningful reform.
“The car tax should completely go away,” he said. “Then we could do a legitimate tax reform, where we do some revenue sharing with the localities and make sure education and law enforcement are well taken care of but the car tax goes away. That’s what I believe the correct objective ought to be.”
Frustration with Virginia Republicans flirting with a tax increase comes as conservatives watch the actions of Republicans in Washington with some uncertainty on issues from spending to confronting President Obama for his changing of immigration law.
Gilmore said the GOP should not be condemned before they assume control of Capitol Hill next month. However, he does see one area of concern.
“Let’s see exactly what they do in January when they actually get their majority sworn in,” he said. “I think the real danger here is that there will be so many different ideas and priorities that there’s no unifying theme. That may be the danger.”
The former governor said America’s current economic health gives the GOP a golden opportunity to create conditions for significant economic growth. Citing 92 million Americans still looking for work and monthly jobs reports stuffed mostly with part-time job creation, Gilmore said Republicans have their unifying theme staring them in the face.
“Cut taxes appropriately, grow the economy and then really get this country moving again and add to a unified conservative Republican approach to government we can all agree on,” he said.
